Sandra: We have an entire year of learning about real-time payments since the NACHA Payments conference last year,how do you think the conversation will evolve at this year’s show?
Steve Ledford: The industry has continued to advance the conversation around faster and real-time payments since last year’s edition. So much so, that NACHA has introduced the term “Faster” in front of Payments 2017 for the conference this year. Last year we were talking about the possibilities of what faster and real-time payments could be—and this year we already have the first phase of Same Day ACH implemented, allowing for expedited same day settlement of batch based payments. Additionally, the brand launch of Zelle is coming up, which will give a common experience to Financial Institution-based P2P payments and the Federal Reserve Faster Payments Task Force is preparing to issue their guidance for how the industry can continue to move forward. TCH is in the final phases of development and testing a new real-time payments rail (RTP) for the United States. Launching later this year, RTP will be the sixth payment rail and a platform for payments innovation for the entire industry.
Do you think there is a solid understanding of the Request for Pay transaction? Do you think it is a successor model to direct debit, or just an alternative option?
SL: Request for Payment is a new functionality being developed as part of the Real-Time Payment rail that TCH is building out. It is game-changing functionality that is new for any payment platform and will allow for customers to now have complete context for the payment being made, without having to leverage a secondary channel, like snail mail or e-mail.
Request for Payment enables a party that has a pre-existing relationship with another party to request fund for an obligation. That obligation could be a business invoice, consumer bill or simply for splitting the bill at dinner in Austin between a group of friends. The request message travels through the same secure payment system and bank channel and when responded to by the payer through a subsequent Credit Push transaction, carries all the information that the requestor needs to enable straight-through processing. All of this could happen in as little as a few seconds and with the credit push nature of the Real Time Payments network; it allows for the party being paid to have certainty that the funds are good and immediacy of reconciliation so the parties can move on in their busy lives.
Request for Payment should not be viewed the same as a third-party debit to a customer’s account. In a third-party debit scenario, the transaction is somewhat blind. A Request for Payment requires that the payer actually responds to the request with the forward payment. These are two separate processes—and if the payer doesn’t recognize the request, then that person has the ability to not send the credit, which ultimately puts the payer in better control of their funds!
What aspects of payments processing are not discussed enough around real-time payments?
SL: With real-time payments, it’s well established that the system is always on with 24×7 clearing, continuous settlement and real-time posting and availability. What is probably not as well-known is the robust set of messaging capabilities that are available by leveraging the ISO 20022 framework. In fact, we expect that more non-dollar messages will travel through this secure payment rail then dollar-related messages. Messages including the ‘Request for Payment’ message we discussed previously, ‘Payment Acknowledgement and Confirmation’ messages, ‘Request for Additional Information’ and ‘Remittance Detail’ can be used in different ways to create truly innovative and frictionless customer-facing solutions. The new Real-Time Payments rail that TCH is developing for the U.S. Payment Industry will enable all financial institutions to better meet their customers’ needs in the future.
ACI will showcase its UP Immediate Payments solution at NACHA PAYMENTS 2017 (booth #411), April 23-26 in Austin, Texas.